Retirement is Not What it Used to Be

Retirement used to be such a simple concept. It required that you work steadily for 40 or 45 years and then you retired at the age of 65. The U.S. economy would reward you for a life of work by supplementing your savings in old age with a Social Security pension. Pretty simple, huh?

All you had to do was hold down a job, and one day you’d find yourself retired to a life of relative comfort. It’s simply not that way anymore. Just ask the members of the baby boom generation that grew up with this understanding. There are 77 million members of the generation born between 1946 and 1964. The oldest of the boomers turn 65 this year and retirement for most of them is anything but a comfort.

A survey done by the American Institute of Certified Public Accountants shows that retirement plans have been disrupted by the nation’s economic struggles over the past three years. The survey found that a large chunk of the baby boomer generation–which represents 37 percent of all people 16 or older–has been forced to reevaluate their futures.

More than 85 percent of boomers reported in the survey that they expect to work longer than anticipated because of a lingering recession and the effect it has had on retirement savings and job stability.

Nearly a third (32.3 percent) say they now intend to work 1 to 3 years longer than they expected, while 39.7 percent think they will now work another 4 to 6 years longer. A smaller number (9.8 percent) expect to work 7 to 10 years more than anticipated and 3.7 percent say they will have to work more than 10 years longer.

“Boomers have been scarred by the economic turmoil of the past few years and face complex challenges going forward,” said Clark M. Blackman of the institute.

Blackman added that boomers may be more optimistic about stock markets today than they were a year ago, but uncertainties caused by the economic downturn have cast a dark cloud over retirement plans. Some boomers have lost their jobs during the current recession, which means they will have to work longer to recover that lost income, or they may be working longer to help their children or grandchildren who have also been jostled by the job market.

A corresponding decline in home values and rising education costs also play a factor in working longer, he said. And, the fallout from the economic downturn may eventually prove to be even worse than the survey revealed. The survey mentioned above found that the accountants surveyed typically have $500,000 to $5 million in assets. Those are mainly middle- and upper class families who have been able to set aside significant retirement savings.

But what does that say for millions of Americans who have modest or no retirement savings? The Social Security Administration already is ratcheting up qualifying ages for younger workers. That means that an age-65 retirement will become increasingly rare in the years ahead.

Comments

What too few people know is that the baby boomers have been ripped off by the looting of the Social Security trust fund. The 1983 Social Security "fix" required the baby boomers to become the first generation ever to have to prepay the cost of their own benefits, in addition to paying for the benefits of the previous generation. They got hit with a double whammy. As a result, the boomers have contributed more to the Social Security fund than any other generation, and they have already paid for their own benefits. Yet they are used over and over by many as scapegoats for the current Social Security problems.

Because they were required to contribute enough to Social Security to prepay their own benefits, those contributions represent forced saving imposed on them by the government. That was bad enough, but it gets worse! The 1983 payroll tax hike has generated $2.6 trillion in surplus Social Security revenue which was supposed to all be saved and invested to build up a large reserve with which to pay benefits to the baby boomers. BUT ALL OF THAT MONEY HAS BEEN "BORROWED" OR "STOLEN" BY THE GOVERNMENT and diverted into the general revenue fund where it has been spent on such things as tax cuts for the rich, two wars, and other government programs. The public must demand that the looted Social Security money be repaid!

I have dedicated the past ten years of my life to trying to alert the pubic to the fact that the government has been "borrowing," "embezzling" "or stealing"--whichever word you prefer--money from the Social Security fund, for the past 25 years, and using it to finance tax cuts for the rich, wars, and other government programs.

I first stumbled onto the great Social Security scam more than ten years ago while doing research for my first Social Security book, "The Alleged Budget Surplus, Social Security, and Voodoo Economics." On September 27, 2000, I appeared on CNN with anchor Lou Waters to discuss the newly published book. I tried my best to convince Waters that Social Security money was being spent for non-Social Security purposes, but he seemed more amused than interested in what I was saying, and he finally asked me, "Are you a voice crying in the wilderness?" As things turned out, I was a voice crying in the wilderness in 2000, and I continue to be such a voice a decade, and three books, later. Every penny of the $2.6 trillion in excess Social Security revenue, generated by the 1983 payroll tax hike, has been spent on whatever politicians chose to spend it on.

When my book, "The Looting of Social Security," was published in early 2004, I thought I was about to expose the Social Security scam and end the looting. On February 26, 2004, I was one of two invited guests to appear on the CNBC morning news to respond to Fed Chairman Alan Greenspan's call for Social Security benefit cuts the previous day. I used the occasion to hold my new book in front of the camera and say, "Alan Greenspan should be ashamed of himself for what he is not telling the American people." By doing so, I apparently drove the final nail into the coffin of my new book. Several weeks later, the book mysteriously disappeared from bookstores nationwide, and was listed as "unavailable" by Amazon.com. I tried to get my publisher to revert the rights to the book back to me so that I could publish it elsewhere, but the publisher refused. It would be 2008 before I would regain the rights to the book. An early review in the Boston Globe had hinted at the explosive revelations in the book, and someone, or some group, decided that the book should be pulled from the market.
Allen W. Smith, Ph.D.
www.thebiglie.netironwoodas@aol.com
1-800-840-6812

I want to thank the moderators for allowing my posts to appear, and I respectfully ask them to allow me to make additional posts. Since my 2004 appearance on CNBC, and the censorship of my book, it has been very difficult for me to reach the public through the mainstream media. It appears that the looting of Social Security became a taboo subject that the government did not want reported, and most of the media would not touch the subject with a ten-foot-pole. In an effort to compensate for the media's failure to cover the subject, I have spent more than $30,000 of personal money during the past decade trying to publicize the problem by issuing releases through PR Newswire and other media outlets.

From 1935 to 1983 Social Security operated strictly on a "pay-as-you-go" basis. Each generation paid for the benefits of the preceding generation. But the 1982 Greenspan Commission on Social Security Reform foresaw problems when the baby boomers began to retire in about 2010. The boomers, the largest generation in American history, would threaten the solvency of the program unless actions were taken to "fix" the problem. They recommended that the boomers be required to pay enough additional taxes to prepay the cost of their own benefits, as well as paying for the cost of their parents' generation. The boomers were hit with a double whammy, and they have paid more into Social Security than any other generation. The 1983 payroll tax hike has generated $2.6 trillion in surplus revenue which was supposed to be saved and invested to build up a large reserve in the trust fund. If that had been done, there would be enough in the trust fund to pay full benefits until 2037, when the oldest of the boomers would be 91 years old.

The surplus revenue generated by the 1983 tax hike should have been used to buy pre-existing marketable Treasury bonds in the open market. The trustees could then have resold these bonds in the open market to raise funds with which to pay benefits to the boomers. If this had been done, Social Security would not even be in the news today. The trust fund would hold $2.6 trillion in "good-as-gold," default-proof marketable Treasury bonds which would be enough to pay full benefits until 2037. BUT THIS WAS NOT DONE. Greedy politicians chose to divert the surplus revenue into the general fund and use it for other programs. The money was replaced with government IOUs which are nothing more than claims against future tax collections. The IOUs are not marketable, cannot be converted into cash, and cannot be used to pay benefits. Thus, ever dollar of the $2.6 trillion in surplus Social Security revenue has been spent on other government programs. Much of it ended up in the pockets of the super rich in the form of unaffordable income tax cuts under Reagan and George W. Bush.